Oceaneering Announces Record Quarterly Earnings

-- Narrows 2014 EPS Guidance Range to $3.95 to $4.05

-- Initiates Third Quarter 2014 EPS Guidance of $1.10 to $1.15

Jul 23, 2014, 17:02 ET from Oceaneering International, Inc.

HOUSTON, July 23, 2014 /PRNewswire/ -- Oceaneering International, Inc. (NYSE: OII) today reported record quarterly earnings for the second quarter ended June 30, 2014.

On revenue of $927.4 million, Oceaneering generated net income of $110.3 million, or $1.02 per share.  During the corresponding period in 2013, Oceaneering reported revenue of $820.4 million and net income of $98.8 million, or $0.91 per share.

Summary of Results

(in thousands, except per share amounts)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2014

2013

2014

2014

2013

Revenue

$

927,407

$

820,372

$

840,201

$

1,767,608

$

1,538,924

Gross Margin

218,215

201,864

189,491

407,706

362,239

Income from Operations

161,311

146,337

132,862

294,173

254,627

Net Income

$

110,295

$

98,811

$

91,225

$

201,520

$

173,660

Diluted Earnings Per Share (EPS)

$1.02

$0.91

$0.84

$1.86

$1.60

Year over year, quarterly EPS increased on profit improvements from Subsea Products, Remotely Operated Vehicles (ROV), and Subsea Projects.  Sequentially, quarterly EPS rose on higher operating income principally from Subsea Products and Subsea Projects.

M. Kevin McEvoy, President and Chief Executive Officer, stated, "Our quarterly EPS was slightly above our guidance, and was up 21% over the first quarter of this year and 12% over the second quarter of 2013.  EPS for the first half of 2014 was 16% higher than the first half of 2013.  We achieved record quarterly operating income from Subsea Products, and for the first time Subsea Products operating income exceeded that of ROV.

"Our outlook for the second half of this year remains positive and unchanged overall from last quarter.  Given this outlook and our year-to-date performance, we are narrowing our 2014 EPS guidance range to $3.95 to $4.05 from $3.90 to $4.10.  Relative to the first half of 2014, we expect to generate higher income from each of our operating segments during the second half, led by ROV and Subsea Projects.  We continue to forecast year-over-year operating income growth for all of our oilfield segments in 2014.

"Compared to the first quarter, Subsea Products operating income rose on the strength of increased revenue and profitability from tooling and subsea hardware.  Subsea Products backlog at quarter end was $850 million, compared to our March 31 backlog of $894 million and $902 million one year ago.  During the quarter we announced one large umbilical contract for offshore Indonesia.

"ROV operating income was essentially flat, as operating margin declined due to higher repair and maintenance expenses, unanticipated startup costs associated with placing new systems in service, and lower fleet utilization.  Revenue grew on increases in days on hire and revenue per day on hire.  During the quarter we put 13 new ROVs into service and retired 4.  At the end of June we had 323 vehicles in our fleet, compared to 296 one year ago.

"During the second half of this year, we expect to place at least 13 new ROVs into service, and we have contracts for all of these.  When these new vehicles are placed into service depends upon the actual commencement dates of new drilling rig and vessel project work.  We now anticipate adding 40 or more new systems to our ROV fleet in 2014.

"Sequentially, Subsea Projects operating income increased largely as a result of adding a vessel, the Bourbon Evolution 803, to our Field Support Vessel Services contract with BP for work offshore Angola and a higher profit contribution from the Ocean Alliance in the U.S. Gulf of MexicoThe Ocean Alliance was out of service for much of the first quarter undergoing a regulatory drydock inspection.  Asset Integrity operating income improved slightly due to a seasonal increase in activity in Europe and the Caspian Sea area.  Advanced Technologies operating income declined due to execution issues on certain U.S. Navy and industrial projects.

"For the third quarter of 2014, we are projecting EPS of $1.10 to $1.15.  We expect sequential improvements in income from all of our operating business segments, led by ROVs.

"Our liquidity and projected cash flow provide us with ample resources to invest in Oceaneering's growth.  At the end of the quarter, our balance sheet reflected $103 million of cash, $80 million of debt, and $2.2 billion of equity.  During the quarter we generated EBITDA of $217 million, $403 million year to date, and for 2014 we anticipate generating at least $855 million.

"In June we increased our regular quarterly cash dividend by 23% to $0.27 from $0.22 per share. This underscores our continued confidence in Oceaneering's financial strength and future business prospects.

"Looking beyond 2014, we believe that the oil and gas industry will continue its investment in deepwater projects.  Deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low finding and development costs.  With our existing assets and opportunities to add new assets, we are well positioned to supply a wide range of services and products to safely support the deepwater efforts of our customers."

Statements in this press release that express a belief, expectation, or intention are forward looking.  The forward-looking statements in this press release include the statements concerning Oceaneering's:  positive outlook for the rest of this year; 2014 EPS guidance range; forecast of higher income from all oilfield segments in 2014 compared to 2013; expectation of higher operating income in the second half of 2014, relative to the first half of 2014, led by ROV and Subsea Projects; statements about backlog, to the extent backlog may be an indicator of future revenue or profitability; anticipated additions to its ROV fleet in 2014; third quarter EPS guidance range; expectation of sequential quarterly improvements in income from all operating business segments, led by ROV; belief that its liquidity and projected cash flow provide ample resources to invest in the company's growth; anticipated minimum 2014 EBITDA; belief that the oil and gas industry will continue its investment in deepwater projects; and belief that deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low finding and development costs.  These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on current information and expectations of Oceaneering that involve a number of risks, uncertainties, and assumptions.  Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated.  For a more complete discussion of these risk factors, please see Oceaneering's latest annual report on Form 10-K and quarterly reports on Form 10-Q  filed with the Securities and Exchange Commission.

We define EBITDA as net income plus provision for income taxes, interest expense, net, and, depreciation and amortization.  EBITDA is a non-GAAP financial measure.  We have included EBITDA disclosures in this press release because EBITDA is widely used by investors for valuation and comparing our financial performance with the performance of other companies in our industry.  Our presentation of EBITDA may not be comparable to similarly titled measures other companies report.  Non-GAAP financial measures should be viewed in addition to and not as an alternative for our reported operating results or cash flow from operations or any other measure of performance as determined in accordance with GAAP.  For a reconciliation of our EBITDA amounts to the most directly comparable GAAP financial measures, please see the attached schedule.

Oceaneering is a global oilfield provider of engineered services and products, primarily to the offshore oil and gas industry, with a focus on deepwater applications.  Through the use of its applied technology expertise, Oceaneering also serves the defense, entertainment, and aerospace industries.

For further information, please contact Jack Jurkoshek, Director Investor Relations, Oceaneering International, Inc., 11911 FM 529, Houston, Texas 77041; Telephone 713-329-4670; E‑Mail investorrelations@oceaneering.com. A live webcast of the company's earnings release conference call, scheduled for Thursday, July 24, 2014 at 11:00 a.m. Eastern, can be accessed at www.oceaneering.com/investor-relations/.

 

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Jun 30, 2014

Dec 31, 2013

(in thousands)

ASSETS

Current Assets (including cash and cash equivalents of $103,330 and $91,430)

$

1,530,712

$

1,433,275

Net Property and Equipment

1,312,585

1,189,099

Other Assets

539,887

506,126

TOTAL ASSETS

$

3,383,184

$

3,128,500

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

$

767,107

$

727,088

Long-term Debt

80,000

Other Long-term Liabilities

363,447

357,972

Shareholders' Equity

2,172,630

2,043,440

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

3,383,184

$

3,128,500

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended

For the Six Months Ended

Jun 30, 2014

Jun 30, 2013

Mar 31, 2014

Jun 30, 2014

Jun 30, 2013

(in thousands, except per share amounts)

Revenue

$

927,407

$

820,372

$

840,201

$

1,767,608

$

1,538,924

Cost of services and products

709,192

618,508

650,710

1,359,902

1,176,685

Gross Margin

218,215

201,864

189,491

407,706

362,239

Selling, general and administrative expense

56,904

55,527

56,629

113,533

107,612

Income from Operations

161,311

146,337

132,862

294,173

254,627

Interest income

41

243

79

120

433

Interest expense

(398)

(553)

(411)

(809)

(1,316)

Equity earnings (losses) of unconsolidated affiliates

8

(186)

(36)

(28)

(25)

Other income (expense), net

(417)

(1,591)

294

(123)

(201)

Income before Income Taxes

160,545

144,250

132,788

293,333

253,518

Provision for income taxes

50,250

45,439

41,563

91,813

79,858

Net Income

$

110,295

$

98,811

$

91,225

$

201,520

$

173,660

Weighted average diluted shares outstanding

108,421

108,713

108,724

108,571

108,662

Diluted Earnings per Share

$

1.02

$

0.91

$

0.84

$

1.86

$

1.60

The above Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Income should be read in conjunction with the Company's latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

 

SEGMENT INFORMATION

For the Three Months Ended

For the Six Months Ended

Jun 30, 2014

Jun 30, 2013

Mar 31, 2014

Jun 30, 2014

Jun 30, 2013

($ in thousands)

Remotely Operated Vehicles

Revenue

$

268,274

$

242,163

$

255,819

$

524,093

$

471,791

Gross Margin

$

86,685

$

80,180

$

87,190

$

173,875

$

156,334

Operating Income

$

75,825

$

69,219

$

76,740

$

152,565

$

135,054

Operating Income %

28

%

29

%

30

%

29

%

29

%

Days available

29,059

26,884

27,851

56,910

53,099

Days utilized

24,510

22,362

23,869

48,379

44,066

Utilization %

84

%

83

%

86

%

85

%

83

%

Subsea Products

Revenue

$

327,252

$

258,016

$

260,010

$

587,262

$

472,021

Gross Margin

$

99,558

$

82,389

$

75,129

$

174,687

$

144,734

Operating Income

$

79,497

$

62,060

$

54,516

$

134,013

$

104,839

Operating Income %

24

%

24

%

21

%

23

%

22

%

Backlog at end of period

$

850,000

$

902,000

$

894,000

$

850,000

$

902,000

Subsea Projects

Revenue

$

136,199

$

118,195

$

138,190

$

274,389

$

206,650

Gross Margin

$

30,122

$

27,991

$

24,409

$

54,531

$

42,912

Operating Income

$

25,863

$

23,990

$

20,537

$

46,400

$

35,610

Operating Income %

19

%

20

%

15

%

17

%

17

%

Asset Integrity

Revenue

$

130,229

$

124,740

$

124,159

$

254,388

$

239,589

Gross Margin

$

23,207

$

23,529

$

21,866

$

45,073

$

42,568

Operating Income

$

15,915

$

16,639

$

14,085

$

30,000

$

28,978

Operating Income %

12

%

13

%

11

%

12

%

12

%

Advanced Technologies

Revenue

$

65,453

$

77,258

$

62,023

$

127,476

$

148,873

Gross Margin

$

5,597

$

14,945

$

7,727

$

13,324

$

28,253

Operating Income

$

198

$

10,165

$

2,955

$

3,153

$

18,841

Operating Income %

%

13

%

5

%

2

%

13

%

Unallocated Expenses

Gross margin expenses

$

(26,954)

$

(27,170)

$

(26,830)

$

(53,784)

$

(52,562)

Operating income expenses

$

(35,987)

$

(35,736)

$

(35,971)

$

(71,958)

$

(68,695)

TOTAL

Revenue

$

927,407

$

820,372

$

840,201

$

1,767,608

$

1,538,924

Gross Margin

$

218,215

$

201,864

$

189,491

$

407,706

$

362,239

Operating Income

$

161,311

$

146,337

$

132,862

$

294,173

$

254,627

Operating Income %

17

%

18

%

16

%

17

%

17

%

SELECTED CASH FLOW INFORMATION

Capital expenditures, including acquisitions

$

157,450

$

81,138

$

104,038

$

261,488

$

175,315

Depreciation and Amortization

$

56,057

$

50,173

$

53,351

$

109,408

$

100,025

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

For the Three Months Ended

For the Six Months Ended

Jun 30, 2014

Jun 30, 2013

Mar 31, 2014

Jun 30, 2014

Jun 30, 2013

(in thousands)

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

Net Income

$

110,295

$

98,811

$

91,225

$

201,520

$

173,660

Depreciation and Amortization

56,057

50,173

53,351

109,408

100,025

Subtotal

166,352

148,984

144,576

310,928

273,685

Interest Income/Expense, Net

357

310

332

689

883

Provision for Income Taxes

50,250

45,439

41,563

91,813

79,858

EBITDA

$

216,959

$

194,733

$

186,471

$

403,430

$

354,426

2014 Estimates

Low

High

(in thousands)

Net Income

$

430,000

$

440,000

Depreciation and Amortization

230,000

235,000

Subtotal

660,000

675,000

Interest Income/Expense, Net

Provision for Income Taxes

195,000

200,000

EBITDA

$

855,000

$

875,000

 

SOURCE Oceaneering International, Inc.



RELATED LINKS

http://www.oceaneering.com